Rebounding state budgets, new legislation and a growing number of insured Americans have set the stage for significant growth opportunities in the behavioral healthcare space. However, each organization will need to assess its best prospects to reach more individuals and bring in greater cash flow.
Experts agree that the treatment centers that stand to benefit the most in the new era of growth are those that focus on:
· Currently underserved and growing populations;
· Geographic locations poised for expanded services; and
· High-demand treatment modalities.
The Affordable Care Act (ACA) is paving the way for growth, most notably by increasing the population of insured Americans who have coverage and are seeking health services. ACA also designates mental health and substance abuse disorder benefits as “essential” and requires coverage of them for millions of Americans who previously didn’t receive such benefits. More coverage equals more demand.
As more Americans seek behavioral health services, investors are quickly responding to the promising outlook. A historically fragmented industry, behavioral health is ripe for consolidation and expansion.
“The behavioral health world is definitely experiencing steady growth,” says Dexter Braff, president of the Braff Group. “Buyers are very interested in this space.”
Overall, he says substance-abuse and developmental-disabilities services have experienced the most merger activity recently. According to data from the Braff Group, between 2005 and 2014, there have been 179 merger and acquisition transactions in behavioral healthcare financed through private equity.
While those may be general industry trends, experts say more specific analysis is needed to determine who wants services and which treatment modalities are in highest demand to help treatment centers arrive at the best strategic decisions.
Various segments of the population have emerging behavioral healthcare needs that currently are not being met. Experts say seniors are the most significant market as well as certain pediatric populations and those released from prison who are being enrolled in Medicaid. These underserved population groups offer behavioral healthcare providers a competitive opportunity to carve out a niche and serve the community now and into the future.
The aging of America brings upcoming opportunities in serving a large population of baby boomers. According to the Centers for Disease Control and Prevention, longer life spans and the aging of baby boomers will combine to double the number of Americans age 65 years or older during the next 25 years to about 72 million people. By 2030, older adults will account for roughly 20 percent of the U.S. population.
“The question is: how do we as a field do a better job coordinating with primary care and hospitals to identify these people and screen them?” says Patrick Gauthier, director of AHP Healthcare Solutions and Behavioral Healthcare editorial advisor. “So many of our tools and approaches have been developed for much younger populations, and our collaborations are with providers that serve much younger populations.”
Gauthier says there is a real need for behavioral healthcare specialists to coordinate with other specialists who commonly work with the older population, whether it’s oncologists, cardiologists or geriatric neuropsychologists, for example.
“It’s going to be critical that we as a specialty begin to talk to other specialists and not just to the hospital and not just to the primary care physician,” he says.
One prevalent behavioral healthcare need among seniors is addiction and substance abuse treatment. According to the University of Pennsylvania Health System, there are 2.5 million older adults with an alcohol or drug problem in the United States. The university also reports that older adults are hospitalized just as often for alcohol-related problems as they are for heart attack. Nearly 50 percent of nursing home residents have alcohol-related problems.
Doug Tieman, the president and chief executive officer of Caron Treatment Centers, and Behavioral Healthcare editorial advisor, says Caron identified this need within the community and recently added a 10-bed program specifically catering to older adults at its Pennsylvania campus. Just a week after opening, seven of the 10 beds were already filled.
The new program is designed to treat elderly patients and address their unique needs clinically and logistically. For example, the facility space has handicapped showers, wider hallways, handrails, bedrails and even an interior color scheme chosen to appeal to the population’s preferences. Staff are trained to identify medical concerns often seen in older adults, such as vitamin deficiencies, and are also prepared to address co-occurring medical conditions.
The Pennsylvania campus also offers a 12-Step program for older adults with topic discussions such as loss of a spouse, retirement, reduced energy or estrangement from family.
“It’s really about designing a specific program to deal with a unique need, which requires very deliberate treatment protocols,” Tieman says.
Caron also plans to build a new 35,000 square foot medical center, which will include 20 additional beds for its senior program so that staff will be able to manage the medical issues the population presents. It’s common for older patients to have one or more chronic conditions that might complicate behavioral health treatment.